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COVID-19’s Impact On The STI: How Singapore’s Strongest Stocks Are Faring – And Should You Invest Now?

Even within the STI, SGX actually eked out a gain a 3% in 2020, while SATS has dived 40%.


The 1st quarter of 2020 was not so great for stocks as the severity of COVID-19 global spread became apparent. Actually, according to CNN, the Dow Jones Industrial Average (DJIA), which began in 1896 and is one of the oldest and most watched indexes, just closed out its worst ever quarterly start to a year, dropping 23.2%

It should come as no surprise that the strongest stocks in Singapore have also been significantly impacted. In the 1st quarter of 2020, the STI has fallen an even steeper 24.3%. On top of that it doesn’t even take into consideration that the US dollar has gained nearly 6.6% against the Singapore dollar in the 1st quarter of 2020.

Read Also: What Past Market Crashes Can Teach Investors About The 2020 Crash That We’re Currently In

By the time you read this, Singapore’s benchmark Straits Times Index (STI) would likely have dipped even further on the back of the declining US markets (as at the time of writing, the US market is down 3.2%).

How Much STI Stocks Have Fallen In 2020

The STI comprises 30 of the largest and most liquid companies listed in Singapore. As mentioned, they have already tumbled more than 24.3% in 2020, and has also dipped 1.7% on 1st April 2020 and is poised to drop further because of declining US markets overnight.

Here’s how much each STI stock has fallen so far (1st quarter of 2020 + 1 April 2020):

No Stocks Change In 1st Quarter 2020
1 Ascendas REIT (SGX: A17U) -5%
2 CapitaLand Commercial Trust (SGX: C61U) -27%
3 CapitaLand (SGX: C31) -26%
4 CapitaLand Mall Trust (SGX: C38U) -30%
5 City Development (SGX: C09) -35%
6 ComfortDelGro (SGX: C52) -38%
7 DairyFarm (SGX: D01) -22%
8 DBS (SGX: D05) -30%
9 Genting Singapore (SGX: G13) -26%
10 HongKongLand (SGX: H78) -33%
11 Jardine C&C (SGX: C07) -36%
12 Jardine Matheson Holdings (SGX: J36) -12%
13 Jardine Strategic Holdings (SGX: J37) -28%
14 Keppel Corp (SGX: BN4) -22%
15 Mapletree Commercial Trust (SGX: N21U) -27%
16 Mapletree Logistics Trust (SGX: M44U) -10%
17 OCBC Bank (SGX: O39) -23%
18 SATS (SGX: S58) -40%
19 SembCorp Industries (SGX: U96) -33%
20 SGX (SGX: S68) 3%
21 SIA (SGX: C6L) -38%
22 SingTel (SGX: Z74) -25%
23 SPH (SGX: T39) -18%
24 ST Engineering (SGX: S63) -23%
25 ThaiBev (SGX: Y92) -33%
26 UOB (SGX: U11) -28%
27 UOL (SGX: U14) -21%
28 Venture (SGX: V03) -19%
29 Wilmar International (SGX: F34) -23%
30 Yangzijiang Shipbuilding (SGX: BS6) -25%

 

As you can see, majority of Singapore’s strongest stocks are in the red. Some of them quite deeply, with up to 40% drops.

5 Worst Performing STI Stocks In 2020 So Far

No Stocks Change In 1st Quarter 2020
1 SATS -40%
2 SIA -38%
3 ComfortDelGro -38%
4 Jardine C&C -36%
5 City Development -35%

Interestingly, or not so surprising perhaps, is that the top two losers are aviation companies. Globally, cities and entire countries have gone on lockdowns. Governments are also implementing social distancing measures with increasing rigidity. Thus, it is not far-fetched that SATS and SIA are the most impacted.

Particularly, SIA, which has announced that 96% of its capacity has been slashed, will also need to recapitalise, with up to $8.8 billion in rights issue of shares and bonds.

ComfortDelGro is an integral part of the transportation system in Singapore, and is also one of the largest land-transport companies in the world. Again, unsurprisingly, with social distancing measures and an increasing number of companies sending its employees to work from home, the company is bearing the brunt of the COVID-19 pandemic.

Jardine C&C is a conglomerate with exposure to the automotive industry in South East Asia, which may also explain the impact COVID-19 has on its businesses.

City Development has significant exposure to hotels (26%) and investment properties (28%), which could be reason why it is also one of the hardest hit STI stocks.

Read Also: Stock Markets Are Down By Double Digits So Far. When’s The Best Time To Start Buying?

5 Best Performing STI Stocks In 2020 So Far

No Stocks Change In 1st Quarter 2020
1 SGX 3%
2 Ascendas REIT -5%
3 Mapletree Logistics Trust -10%
4 Jardine Matheson Holdings -12%
5 SPH -18%

 

Out of the top five best performing stocks, only SGX maintains a positive return in 2020 – which is truly extraordinary given that another company on the STI tumbled 40% during the same time frame.

One reason for the positive performance could be that traders and investors are making more transactions in the market which may be positive for the local stock exchange.

The next two best performing stocks are 5% and 10% in the red. Ascendas REIT and Mapletree Logistics Trust are both industrial REITs, which are perhaps in better shape compared to hospitality REITs or Retail REITs. Even Commercial REITs may be in poor shape with companies told that it must allow employees to work from home if possible.

Jardine Matheson Holdings is another conglomerate with diverse holdings in Jardine Pacific (engineering, construction, airport and transport services, restaurants and IT), Jardine Motors (sales and servicing of motor vehicles in Hong Kong, Macau, the UK and Southern China), as well as 85% stake in another conglomerate on the STI Jardine Strategic Holdings, which has dipped 22% in the year-to-date.

In turn, Jardine Strategic Holdings has significant stakes in three other STI stocks: i) HongKongLand, with a year-to-date performance of -33%, ii) DairyFarm, with a year-to-date performance of -22%, iii) Jardine C&C, one of the worst-performing STI stocks with a year-to-date performance of -36%; and Mandarin Oriental, a Singapore- listed company with a year-to-date performance of -26% and Astra, an Indonesia-listed automotive company with a year-to-date performance of -46%.

Finally SPH, with a year-to-date performance of -18% rounds off the top five best STI stocks in 2020. SPH’s business is primarily in media, and with a growing property business, and thus may be more shielded against the ill-effects of COVID-19 as more people are hungry for news on various topics.

Should We Invest Now?

Not even the investment professionals can consistently predict when the best time is to buy stocks.

With so much uncertainties still ahead, there is every chance stocks could continue its nosedive into the next quarters of 2020. At the same time, the STI is trading at a price not seen since 2009, representing a good time to potentially increase exposure to the market.

The best answer to this question is to avoid firing all your bullets into the market now, and instead take a measured approach into buying. This way, you will be purchasing at a price you may think is low, and when prices go lower, you can continue picking up more at better value. If prices turn up, you will be sitting on some profits and can still continue buying as the stock market recovers in the longer-term.

Read Also: 5 Disadvantages Of Using Dollar-Cost Averaging Into A Downward Market (That Many Investors Don’t Realise)

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